Modern Management 9 th edition

1. . Modern Management9th edition

2. . Ü Objectives • Definitions of both strategic planning and strategy • An understanding of the strategy management process • A knowledge of the impact of environmental analysis on strategy formulation • Insights into how to use critical question analysis and SWOT analysis to formulate strategy • An understanding of how to use business portfolio analysis and industry analysis to formulate strategy • Insights into what tactical planning is and how strategic and tactical planning should be coordinated

3. STRATEGIC PLANNING . • Fundamentals of Strategic Planning • Defining Strategic Planning • Defining Strategy

4. STRATEGIC PLANNING . Examples of Organizational Objectives and Related Strategies for Three Organizations in Different Business Areas Table 8.1 Company Type of Business Sample Organizational Objectives Strategy to Accomplish Objectives Ford Motor Automobile 1. Regain market share recently 1. Resize and downsize present models Company manufacturing lost to General Motors 2. Continue to produce subintermediate, 2. Regain quality reputation that standard, and luxury cars was damaged because of Pinto 3. Emphasize use of programmed gas tank explosions combustion engines instead of diesel engines Burger Fast food 1. Increase productivity 1. Increase people efficiency King 2. Increase machine efficiency CP Transportation 1. Continue company growth 1. Modernize Railroad 2. Continue company profits 2. Develop valuable real estate holdings 3. Complete an appropriate railroad merger

5. STRATEGIC PLANNING . Steps of the strategy management process Figure 8.1

6. STRATEGIC PLANNING . • Strategy Management • Environmental Analysis • The General Environment • The Economic Component • The Social Component • The Political Component • The Legal Component • The Technology Component • The Operating Environment • The Customer Component • The Competition Component • The Labor Component • The Supplier Component • The International Component • The Internal Environment

7. STRATEGIC PLANNING . The organization, the levels of its environment, and the components of those levels Figure 8.2

8. STRATEGIC PLANNING . Important Aspects of the International Component of the Organization’s Operating Environment Table 8.2 Economic Environment Legal Environment Level of economic development Legal tradition Population Effectiveness of legal system Gross national product Treaties with foreign nations Per capita income Patent and trademark laws Literacy level Laws affecting business firms Social infrastructure Cultural Environment Natural resources Customs, norms, values, beliefs Climate Language Membership in regional economic blocs Attitudes (EEC, LAFTA, etc.) Motivations Monetary and fiscal policies Social institutions Nature of competition Status symbols Currency convertibility Religious beliefs Inflation Political System Taxation system Form of government Interest rates Political ideology Wage and salary levels Stability of government Strength of opposition parties and groups Social unrest Political strife and insurgency Government attitude toward foreign firms Foreign policy

9. STRATEGIC PLANNING . • Strategy Management (con’t) • Establishing Organizational Direction • Determining Organizational Mission • Developing a Mission Statement • The Importance of Organizational Mission • The Relationship Between Mission and Objectives

10. STRATEGIC PLANNING . • Strategy Management (con’t) • Strategy Formulation: Tools • Critical Question Analysis • SWOT Analysis • Business Portfolio Analysis • The BCG Growth-Share Matrix • The GE Multifactor Portfolio Matrix • Porter’s Model for Industry Analysis

11. STRATEGIC PLANNING . The BCG Growth-Share Matrix Figure 8.3

12. STRATEGIC PLANNING . GE’s Multifactor Portfolio Matrix Figure 8.4

13. STRATEGIC PLANNING . Porter’s model of factors that determine competitiveness within an industry Figure 8.5

14. STRATEGIC PLANNING . • Strategy Management (con’t) • Strategy Formulation: Types • Porter’s Generic Strategies • Differentiation • Cost Leadership • Focus • Sample Organizational Strategies • Growth • Stability • Retrenchment • Divestiture

15. STRATEGIC PLANNING . • Strategy Management (con’t) • Strategy Implementation • Interacting • Allocating • Monitoring • Organizing

16. STRATEGIC PLANNING . • Strategy Management (con’t) • Strategic Control • Monitors • Evaluates • Checks that steps of the process are: • Appropriate • Compatible • Functioning properly

17. TACTICAL PLANNING . • Comparing and Coordinating Strategic and Tactical Planning • Strategic is upper-level management; • tactical lower-level • Strategic is more difficult to gather • than tactical • Strategic is less detailed • than tactical • Strategic covers longer period of time; • tactical covers shorter period

18. TACTICAL PLANNING . Major Differences Between Strategic and Tactical Planning Table 8.3 Area of Difference Strategic Planning Tactical Planning Individuals involved Developed mainly Developed mainly by upper-level management by lower-level management Facts on which Facts are relatively Facts are relatively to base planning difficult to gather easy to gather Amount of detail Plans contain Plans contain in plans relatively little detail substantial amounts of detail Length of time Plans cover Plans cover plans cover long periods of time short periods of time

19. PLANNING AND LEVELSOF MANAGEMENT . Increase in planning time as manager moves from lower-level to upper-level management Figure 8.6

20. Chapter Eight ? Questions